How Web software called “adware” is taking advertising to a new, effective, and extremely annoying level.

By Alan Deutschman2 minute Read

You’re checking out a Web site, looking to buy a plane ticket or maybe a cell phone. Just as you’re ready to buy, a pop-up window appears: Another company is making you a more enticing offer for its competing product. You take the better deal, right? But a little later, you begin to wonder: How did the pop-up rival know what you were up to? Did you just hand over money to an online stalker?

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Welcome to the gray zone of “adware.” Here’s how it works: You download a “free” program such as Kazaa, the file-sharing software popular for copying digital music. You don’t actually read the user agreement, and so don’t realize that by taking Kazaa you have also downloaded and agreed to the terms of Claria’s GAIN, the number-one source of adware. Claria tracks your online whereabouts and plasters your screen with targeted ads once it knows exactly what you want to spend money on.

Adware’s effectiveness is impressive. Claria’s biggest rival, WhenU, claims that Web surfers click on its ads as much as 20% of the time — a stunning improvement over traditional, untargeted pop-ups. WhenU has clients such as JPMorgan Chase, Verizon, and Merck. Claria’s 425 advertisers include American Express and Sprint.

Marketers that have lost business to adware have tried to fight — but their legal assaults have mostly failed, and adware moguls have launched fierce counterattacks. Claria even sued a Web site for calling its product “spyware,” which doesn’t seek permission. Avi Naider, CEO of WhenU, told a Federal Trade Commission hearing that adware is “proconsumer” and “procompetitive.”

Many consumers, though, don’t want adware sneaking onto their hard drives. A Dell executive told the FTC hearing that adware and spyware have become the top reasons why consumers call its tech support. Recently my wife was alarmed when a pop-up warned that her PC was plagued with spyware. The advertiser wanted $29.99 for a program to remove the offending software. How did it know her computer was infected? From the same spyware it promised to purge.

Popular antivirus programs such as Norton and McAfee can detect spyware and adware, or you can uninstall the offending software from Windows by clicking on Start, then Settings, then Control Panel, then Add/Remove Programs, then the particular program. The catch: Adware and spyware sometimes disguise themselves under aliases. (WhenU, for example, might be listed as “Save!” or “SaveNow.”) No wonder many people are buying programs that eliminate the stuff, such as Spy Sweeper ($29.95 at www.spysweeper.com).

Better yet, be careful before you download anything “free.” It probably isn’t.

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A version of this article appeared in the November 2004 issue of Fast Company magazine.